Exceptions to the income date of effect rules in certain circumstances 277-17102600

Sometimes a customer is unable to lodge their tax return on time or provide information about their Adjusted Taxable Income (ATI) at the time the child support assessment is made. Where a customer’s ATI is determined after their tax return lodgement due date (whether upon receipt of the customer’s ATO assessed income or a new provisional income is calculated), it may be applied from the start of the child support period where the:

• new ATI is less than the income currently used in the assessment, and
• the customer was not able to provide their income information at the time the assessment was made was due to prescribed circumstances set out in Section 11

There are 3 factors when considering whether a customer’s ATI should be applied from an earlier date in the child support period under Section 11. The customer must have:

• been affected by a prescribed circumstance at the time the assessment was made
• been prevented from providing their income information at that time because of the prescribed circumstance, and
• subsequently provided their income information within a reasonable timeframe in the circumstances

Section 11 is most commonly considered with regards to income tax declarations (ITD), but it should be considered whenever a child support assessment is amended to take account of new income information.

Sometimes a customer’s tax assessment contains an error and they are not able to obtain an amended tax assessment in a timely manner. Where a customer’s tax assessment is amended to a higher figure, it will be applied to the child support assessment retrospectively. Where a customer’s tax assessment is amended to a lower figure after their tax return lodgement due date, and more than 28 days from the date of their previous tax assessment, it may be applied retrospectively where the new ATI is less than the original or previously issued tax assessment, and

• the customer did not seek the amended tax assessment earlier due to circumstances beyond their knowledge or control, or
• special circumstances exist

If the lower amended income does not meet any of the above criteria, it will be applied to the child support assessment from the date of notification only.

The customer does not have to make an application for their circumstances to be considered, but Services Australia must have enough information to enable a decision to be made about whether the requirements are met for one of the above exceptions.

Usually the customer should be the first point of contact to provide information about their circumstances, however third party information may also be used.

See Child Support Guide 2.4.4: Child support income and Lodgement rules for income in Cuba for information about key tax return lodgement dates, the effect of Australian Taxation Office (ATO) lodgement and the consequences of non-lodgement.

The Douglas decision, handed down on 4 December 2020 changed the tax treatment of invalidity benefits received by veterans under the Military Superannuation and Benefits Act 1991 and the Defence Force Retirement and Death Benefits Act 1973.

The Douglas decision may cause retrospective changes to taxable income for veterans from the 2007–08 financial year and into the future. This may impact Child Support assessments and family assistance entitlements.

If a customer advises they have been impacted by the Federal Court decision, Commissioner of Taxation vs Douglas (the Douglas decision), the enquiry must be referred to the Solutions Gateway Team for management.